Nearshore development means outsourcing to a company, which is in the same region as yours. These countries usually do not have a time difference of more than only a few hours.
Onshore development means outsourcing to a company, which is in the same country as yours.
Offshore development means outsourcing to a company, which is in another region or another continent as of yours. These countries usually have a huge time difference.
The difference between a Nearshore, Offshore and Onshore Company
A common question that often arises in the minds of people is that what exactly is the difference between nearshore vs. onshore vs. offshore, software development companies? What is the difference between these three types of companies and how are they different from each other.
What are Onshore vs. Offshore Development Companies?
The difference is straightforward between onshore vs. offshore companies. There is no difference in the kind of work that both companies do for their clients. They are capable of conducting the same type of work; however, a significant difference is between them, which leads to stark contrast, does not pertain to the kind of work but instead that where the work is being done.
The difference lies in the geographical area of the work, where the work is mainly carried out. Whether it is done in the same country, territory as the company, or has been transferred to another team in another country to be completed.
In simple terms, it is where the tasks are carried out and completed, which is the primary difference. And hence, for offshore companies, the work is outsourced to beyond the shore service providers. In contrast, in terms of onshore companies, the tasks and work is performed in the same country as the client.
There are many benefits of outsourcing to the offshore companies, primarily including the affordable labor costs, or lack of skills and talent in the company, which is outsourcing.
For example, if your core business is not development, and you want to outsource app development tasks to an affordable agency with skilled developers. Outsourcing to an offshore company is what you need. This is due to the affordable costs that you can avail of. Since the developers in these countries have a very low cost of living, even talented and skilled developers come at a more affordable price in comparison.
Developers of onshore companies, in contrast, live in the same country as yours and they have a high cost of living. Therefore, developers with the same experience level and skill-set cost much higher in onshore companies.
Therefore, the main difference that exists between these companies is where the job and work is carried out and performed.
How are Nearshore Companies Different from Onshore & Offshore Companies?
Nearshore companies, in contrast, work in a way similar to offshore companies. Nearshore companies, however, ensure that all business partners are working through similar time zones and within proximity of each other. Through this, they can avail an effortless medium of communication, accessible visits to sites, and also avail and make use of easy, affordable costs and high-quality results. Hence Nearshore outsourcing gives certain benefits, which can be very helpful and useful.
Therefore, offshore companies are those which have employees and teams in other countries across the globe such as Pakistan, India, China, etc. One of the most important offshoring benefits is the availability of talented developers at an affordable price and saving costs.
The offshore model is used across various fields ranging from software development, data services, cold calling, customer care to KPO, and BPO operations.
Onshore companies, in comparison, assign these similar tasks to their native and local employees and teams within their own country. This eventually leads to a clear communication system as it is easier to communicate with and understand workers within the same country following the same system. It will also lead to saving time as they will all be working with in the same time zone.
Are Onshore vs. Offshore Companies Both Beneficial?
There are several advantages and disadvantages associated with both onshore vs. offshore type of companies which carry out such tasks. One of the leading and primary differences present between these companies is the cost of completing the tasks. As onshore companies will work in their territory, which is usually in developed countries such as the US and UK, workers charge a higher fee to complete tasks. This is due to the high living costs present in these countries.
In comparison, when the same tasks are outsourced to developing countries, they charge less to perform the tasks as the living costs there are at a lower rate than the developed countries. And hence due to this, the same task can be done at a much affordable cost when outsourcing to an offshore company.
Benefits of Offshore Outsourcing
Offshore companies have the advantage of:
- being able to hire affordable developers to perform their tasks
- being able to offer high-quality work
- maintaining client relations through effective communication via video calls and emails.
The advent and advancement of technology have introduced some of the best practices for managing offshoring teams. It has also become easier to maintain such relationships with ease without facing any hindrances and troubles and has lead to efficient offshore team management.
Another important advantage associated with them is that the burden can be easily divided, and less pressure is felt amongst the employees. It allows for various projects to be completed simultaneously at a fast pace as several projects can be done together without any hassle.
Disadvantages of Offshore Outsourcing
The disadvantages and negative aspects associated with these companies include factors such as:
- different time zones as developers live in different countries which could often lead to delays and time lags
- cultural differences with English not being the primary language
- resolving issues and disputes within the country can be easier as compared to dealing with a foreign legal system
- working with offshore teams means dealing with different time zones, which often proves to be difficult and can sometimes lead to several bad experiences.
Another disadvantage that is associated is the demand for these digital skills is outstripped by its supply in other countries, and often resources available demand a premium charge, which negates the whole purpose of offshore companies. Due to these factors recently, several businesses have been seen to be moving to onshore from offshore companies, as they are unable to derive the previous benefits from offshore companies.
Moreover, a recently popular trend that is widely being used is crowdsourcing platforms. These platforms do not take into account the location and are indifferent to the geographical presence. These platforms also possess skilled resources, along with the latest technology.
Benefits of Onshore Outsourcing
With onshore companies, despite tasks being completed in the homeland and within the same location, often employers may have to bear a higher cost for domestic workers, and they would also be restricted to a limited pool of talent and skills. However, they would not experience language or cultural barriers and would also be in the same time zone. This would mean that they do not have to face any delays or lags and can have face to face meetings scheduled on a daily or need basis.
Additionally, being engaged with onshore companies means that you are both abiding by the same rules and regulations, and it would be easier to deal with any problems that could arise. Since the location would be the same, the territory would also be similar. Offshoring benefits would include familiarity with the rules and regulations and how things operate in the region. They would not be required to go through an unfamiliar process with laws and regulations they are not used to and have not previously abided by either.
This could be essential and very important as legal matters can be dealt with efficiently with in the same country rather than having to deal with a foreign legal system and go through that process.
Disadvantages of Onshore Outsourcing
On the other hand, disadvantages associated with these companies include a high labor cost as often domestic workers demand a higher price to complete the tasks in onshore companies vs. offshore companies, which can use affordable labor. They can make use of more inexpensive resources from developing countries.
Furthermore, another limitation and hindrance that exists in onshore companies is that due to the tasks being completed in one specific geographical location, employers only have access to a limited and specific amount of talent, knowledge, and skills that they can attain in that area. They are contained and restricted and cannot explore various skills and abilities besides the ones present in their geographical region.
Offshore companies, on the other hand, can find the best possible talent from across the globe as they can avail the offshoring benefits. This can be done by outsourcing their work to other teams present in other countries hence having higher and broader access.
Final Thoughts: Is Offshore, Onshore, or Nearshore Company For You?
To determine which company is best suited, onshore vs. offshore vs. nearshore, to providing you with the results you desire, you must understand and list down your priorities and expectations and then decide. This decision is to be based on the end results as well as the pros and cons attached to each company. One must evaluate their requirements and eventually then come to deciding whether nearshore, offshore, or onshore companies are best suited for them.